1. Field of the Invention
The present disclosure relates to auctions systems, particularly online auction processes.
2. Background
Online auctions represent a popular, important, and often efficient way of doing business in modern society. Reduced overhead costs allow online sellers to offer goods at lower prices than traditional retailers. Bids can normally be placed at any time of day, from the comfort of one's own home, and generally speaking there are no geographical constraints. Because of this ease of access, there can also be a large number of bidders and sellers, creating a network effect—a large number of bidders can encourage more sellers, which, in turn, can encourage more bidders, which can encourage more sellers, etc.
However, traditional auction systems have their downfalls. In some systems, some bidders may have a gambling addition-like mentality where they treat an online auction like a game rather than being primarily concerned with obtaining goods or services. This can skew the prices of items in the auction. Many auction formats require a large investment in time and effort to bid and maintain bids. Standard auction formats require buyers to bid against one another despite being in the same system and seeking the same good or service. Many auction systems are seller sided, requiring a seller to list inventory to allow bidding, including group auction models such as reverse Dutch auctions. In other auctions, there can be uneven representation of items offered for sale—photographs can be inadequate or descriptions may fail to include important information. And perhaps the biggest pitfall in traditional online auction systems is non-truthful bidding and ultimate sales prices, the result of strategic bidding over truthful valuation and spending limits.
The traditional Vickrey auction system is well known in the art and comprises a sealed bid procedure wherein bidders submit a single sealed bid, and do not know the amount of any competing bids. The winning bidder is the bidder with the best bid (be it highest or lowest, depending on a forward or reverse auction). The winner's bid however is ignored and the winning price is set by the second best bid, or first place loser. By removing the winner's bid from the final price, this auction model is thought to create an incentive to only bid one's true value in the auction. This is known as a truth-telling mechanism, as all bidders in the auction create only injury to their potential gains by bidding any price other than their privately held value. The resulting prices are equivalent to a live bidding auction, however they reduce the number of actions to reach the final price, and release bidders from having to gather in one place or time to bid. However, the truth-telling aspect of a Vickrey system is one-sided, as truthful assessments of private value are made by buyers only, and lack features to allow for group purchasing by many bidders.
What is needed is an auction system for assessing the optimal sale price of an item based on the blind, sealed, single-bidding by potential buyers (revealing the true value of the item to them personally), and the semi-blind, sealed bidding by sellers (revealing the number of items they are willing to sell and the minimum profit margin they are willing to accept per item). In such an invention, “blind” can mean that the potential buyer has no knowledge of other potential buyers' bids nor the bids of potential sellers; “semi-blind” can mean that the potential sellers have knowledge of buyer bids, but no knowledge of other potential sellers' bids. Because potential buyers can reveal their bids to potential sellers, normal sales and marketing costs to the sellers are greatly reduced, resulting in prices lower than what would be possible in a standard retail environment, and thereby attracting more buyers.
In such a system, buyers could solicit items from sellers, eliminating much customer acquisition and selling costs and labor required in a traditional sale transaction. Moreover, in such a system, buyers can group together while maintaining individuality, and incentives to both buyer and seller reduce “game” mentality among bidders and simplify time investments.
A system that creates individual and different group purchase bids by buyers can also entice additional network effects by making use of different individual demands. While one price will result to a group of buyers with different bids, buyers are left with different remains in value from their true private bid. To maximize network effects a 2nd transaction can be placed within this value, examples including a donation to charity of some or all of the price difference, or carbon credit purchases to offset environmental impacts of their purchase. This allows for a single set of buyers to group bid despite different motivations, those seeking cheaper prices through group bidding, and those seeking to transfer purchases to a system that can transfer normal industry costs such as customer acquisition to more noble causes. Buyers can also be divided into sub groups based upon criteria such as geographic region, resulting in a single group having multiple winning sellers and multiple winning buyer groups, all while still requiring only one action per user.
A system that generates individual buyer bids in a group, will result in a demand curve of buyers. Since the seller's bid will be raised to the 2nd lowest offer, there is the possibility that some buyers that the winning seller was willing to sell to will be left out. In some cases it may have been optimal for the seller to have a lower price that results in a higher quantity of buyer bids captured. Such a system can allow for winning sellers to lower their bid within a “price window” between their original sealed bid and the 2nd best bid, to capture higher quantity if so desired. Any adjustment in price would benefit all parties, as it would only occur if the seller deemed it more optimal than the winning price, and buyers only stand to gain from a lower price (regardless of whether they are doing multiple transactions within their single bid). The resulting lower price is unique to this auction system versus the known auction art, and would not occur in a standard reverse running or reverse Vickrey auction.